Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please answer the following questions, showing all work accordingly on all parts. Thank you. and will partially disrupt production. The firm has just completed a

Please answer the following questions, showing all work accordingly on all parts. Thank you.

image text in transcribed

and will partially disrupt production. The firm has just completed a $49,000 feasibility study to analyze the decision to buy the XC-750, resulting in the following estimates: 70% of their sale price. The increased production will also require increased inventory on hand of $1.19 million during the life of the project, including year 0 . - Human Resources: The expansion will require additional sales and administrative personnel at a cost of $2.02 million per year. goods sold. Billingham's marginal corporate tax rate is 21%. a. Determine the incremental earnings from the purchase of the XC-750. b. Determine the free cash flow from the purchase of the XC-750. c. If the appropriate cost of capital for the expansion is 9.7%, compute the NPV of the purchase. e. What is the break-even level of new sales from the expansion? What is the breakeven level for the cost of goods sold? additional sales in years 3 through 10 . What level of additional sales (above the $10.20 million expected for the XC-750) per year in those years would justify purchasing the larger machine? and will partially disrupt production. The firm has just completed a $49,000 feasibility study to analyze the decision to buy the XC-750, resulting in the following estimates: 70% of their sale price. The increased production will also require increased inventory on hand of $1.19 million during the life of the project, including year 0 . - Human Resources: The expansion will require additional sales and administrative personnel at a cost of $2.02 million per year. goods sold. Billingham's marginal corporate tax rate is 21%. a. Determine the incremental earnings from the purchase of the XC-750. b. Determine the free cash flow from the purchase of the XC-750. c. If the appropriate cost of capital for the expansion is 9.7%, compute the NPV of the purchase. e. What is the break-even level of new sales from the expansion? What is the breakeven level for the cost of goods sold? additional sales in years 3 through 10 . What level of additional sales (above the $10.20 million expected for the XC-750) per year in those years would justify purchasing the larger machine

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fintech In Islamic Finance Theory And Practice

Authors: Umar A. Oseni, S. Nazim Ali

1st Edition

1138494801, 978-1138494800

More Books

Students also viewed these Finance questions